Seib & Wessel: Full Glenn Hubbard Interview

6/20/2013 2:30PM

In an interview with WSJ's David Wessel, the Dean of Columbia's Business School Glenn Hubbard discusses why economic mismanagement has been behind the fall of the world's great empires and what that means for modern America.

This transcript has been automatically generated and may not be 100% accurate.

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David Wessel Wall Street Journal joined today by Glenn Hubbard is currently the Dean of the Columbia graduate school of business ... and has been an adviser to both President Bush isn't it out presidential candidate Mitt run ... but I'm glad you're here today because you have a new book out ... called balance ... which is a very ambitious look at the history of vampires back to Rome ... where hours like Paul Kennedy the historian at Yale who said basically great empires died because they ... overreach and spend too much on military ... your view is that they make economic mistakes ... and have ... institutions that don't adapt to changing times ... and that's the real problem to have the right thing you do it's really about politics not keeping up with economics ... in making fairly simple Ecomomic errors ... now you have a number of case studies ... but the one they were going to treat me most was California ... didn't realize is gone the way of Rome just yet ... so what what we learn from California with you for the town's twelve California section the nice example of a very prosperous state obviously ... that has dysfunctional political institutions ... and over time the sources of California's prosperity TBD and if those institutions and budget processes are performed ... California's budget disaster isn't happening because the sport ... it's happening because it's for that and ... and you ... think that California's getting better and injured brewer works well there's certainly some short-term steps that look better ... but in the long term problems are still there are a very large looming pension like the ... right for governor credit spread right ... now on ... when I read your book and utilizes the fall of Rome is the mistakes of the Chinese made in the ancient China that set them back in the technology race ... is the fall of the Ottoman Empire there's the famous story of Japan which has been in either a launch and is now ... trying to pick itself up the floor ... so I spent the last chapter to be ... an American is just gonna go that way to put on us to know that at the ... height I am very optimistic ... about the nine states we have gotten through ... problems before ... this one though was quite serious because both our politics enter budget processes percent for decline ... but both of those can change so explain what's the diagnosis it would use their politics but prices are set ... for ... what we have veering March of water holding title of liabilities in Social Security Medicare to threaten the crowd out all the rest of what government is ... to raise tax burdens on acceptable levels ... and they're not really discuss in our political process in our budget rules to be with them and all ... if we don't adapt ... we will go the way you know ... and and is that the fundamental problems do the things I think that our largest potential challenge because ... it's much harder then a clear and present enemy in the here and now this is is slowly melting problem ... and that's very difficult for politicians ... and why do you think it's so hard for our political system to deal with this particular fiscal problem with our fiscal problems often on over the last fifty years makes the difference I think first of all we have a much more polarized political process than we've ever had before and by that I don't mean part is we always have partisan ... processes in the U S but it's much more polarized ... we don't have budget rules that allow a serious discussion of this these programs grow completely on their own without an auto writer on autopilot and then reviewed ... we can change the politics to make ID is more competitive than we can change budget rules that both of those required ... to ask about the economics and politics ... so ... the carrier beyond economics is you know we've done some deficit reduction it was awfully but we've done some ... the raise taxes we put some caps and only appropriate spending ... health care cost growth seems to slow ... actually if you look over the next decade things don't seem to be getting worse as we fear so is this much ado about nothing in a time when a real problem is unemployment ... well certainly growth is a big problem for the United States but I would argue that making strong true long-term changes ... would give this more room to move for growth oriented policy today ... yes the pixel the fiscal picture is still quite that ... going for if you look at the most recent report from the Congressional Budget Office ... the further out you go ... the gym or it looks ... one of things to surprise me is that I get this right you arguing that the notes that there's too much money in politics and that's the problem has it exactly backwards ... you think there should be more money in politics the new welcome the fact that the Supreme Court ... has let everybody is brother contribute to campaigns to the Senza doll ... I think it's important to step back and look what happened in the early nineteen seventies we assume well intentioned reforms ... that essentially gave the two major political parties of monopoly duopoly ... up on fundraising ... that's really helped of the Interpol would lead to polarization and power to incumbents we need more competition Citizens United ironically provides exactly that competition ... for new ideas that its absolutely ... so you think they did is we have more money go into politics is more likely to be ... some party to spring up in the center or somebody ... to move to the left to the right that is crowded out by the US the optimal number of parties for system like America has is to ... but it doesn't have to be pieced ... into ... overtime to replace the vote what if you look over time to read the Republican party started as a radical abolition party in age don't one major political party that and became oneself ... I think there's every reason to believe we can pull the parties to better ideas or pull up a little ... we also advocate a balanced budget amendment to the constitutional Owen ... got complicated it gets me said when you look back and stuff well I think that's so well I think we may be at that point we have to tie ourselves to the man stood or budget rules we recommended the book that ... we should consider balanced budget amendment that not one that he did deficits one that actually sets a spending limit ... equal to slow moving average inflation adjusted revenue in the reason for that he is ... that it's I wonder whether we should raise taxes or cut spending that we wish to be a political choice ... and I think we ought to allow universal exceptions as long as you make them harder and harder ... to mean more will take us right before you've read and do that Mr. Rudd rather than defining things like war or hurricanes with everything you want whether Congress to get that I think part of the problem particularly frankly on the right ... is that people don't trust the American people we needed budget will its respectful political process ... so let's say they don't take your advice let's say we just shocking ... we don't do much more of the deficit ... and the political system continues a few more years of this ... kind of gridlock where with the possible exception save an immigration bill ... basically no far reaching legislation ... passed ... what will America look like ten years ... if we go the other half will have gradually rising tax burdens and gradually shutting out ... most of what ... many Americans think government speeches diminish defense ... diminished research and education spending ... are you looking more like a common European country and don't think that's what most Americans want signed up and will finally what AHTSs you get you think that ten years and I will look back and say ... basically we got our act together or do you think will be like Roman yet ... I think we would interactive is no question my mind ... but certainly watching day-to-day politics ... the tools ... well I'm totally gonna happen this take no for fear what might